GE Power promises cheaper energy

GE Power, the global energy and infrastructure giant, has given its biggest assurance to Ghanaians of continuous investment in the nation’s energy sector, which will help reduce the cost of electricity by 2020.

Steve Bolze, President and CEO of GE Power, in an exclusive interview told the B&FT that with sustained investment in the sector, coupled with stability in fuel prices and the use of Liquefied Natural Gas (LNG) to power its thermal projects, Ghanaians could be paying less for electricity in four years’ time.

“Thermal is cost-effective in most places in the world now, but expensive here just because of the cost of fuel. But once the cost of fuel comes down, Ghana will have a balance of thermal and hydro and electricity will be cheaper,” he stated.

In 2015, in the midst of a crippling energy crisis the Public Utilities Regulatory Commission (PURC), increased power tariffs by 59.2 percent, explaining that the new tariff will help energy producers to cover the cost of production and attract new investment in order to sustain the regular supply of electricity to homes and industries.

Last year the World Bank and other agencies estimated the power crisis that engulfed Ghana for three years cost the economy 1.5 percent in GDP growth annually.

The Chief Executive Officer of GE Ghana, Leslie Nelson, said looking at the cost of the power crisis to the economy, Ghana is better-off paying the right tariffs now and seeing cost come down later.

He explained that once Ghana combines indigenous gas from the oil fields of Jubilee, Sankofa and the others yet to come on stream with LNG, which is relatively cheap, the cost of electricity will ultimately drop. “As long as fuel prices remain constant and we add more power, the marginal cost of power will decrease,” he added.

GE is overseeing investments of over US$1.5billion in Ghana’s energy sector which will see the installation of more than 1000MW of power by 2020 or earlier.

The company, in collaborations with its partners from Europe and America, said it has already added 250MW of power to the national grid over the past 12 months; and by the end of this year it will be adding 300MW more.

GE Power, in 2014, launched the ambitious US$1.4billion ‘Ghana1000’ project, which will be powered by natural gas for phase-1 and LNG for phase-II to see the addition of 1,000MW of power by 2020. The 300MW set to come onstream this year is the first tranche of the ‘Ghana1000’ project.

Sounding very optimistic about the prospects of Ghana’s energy sector, Mr. Bolze noted that Ghana’s immediate demand for power -- the biggest in Africa right now -- is driving up investment in the sector, which according to him is good for the economy in terms of job-creation.

The GE executive however added that the only way to sustain the investment is by implementing efficient and effective Public Private Partnerships.

“We have made the decision as a company to deploy more of our capital investment in Ghana, not only because the demand is here but because we see the right thing happening between private and public institutions -- all of that will evolve over time,” he added.

Mr. Nelson, in lauding government’s action to introduce the Cost Reflective Tariff so that consumers can pay realistic tariffs, said the move is what is driving investors into the market place.

“Even though it is a bitter pill to swallow, if you are going to attract investors you need the Cost Reflective Tariff that represents the true cost of inputs so investors know their investments are sustainable.”

He believes that Ghana’s power sector, which he described as “not perfect”, is still in a good position going forward.

“We are going through the growing pains and going through an up and down cycle that any country goes through, but the key thing is we are heading in the right direction and we have foreign investors like GE very interested in investing in this country.”

Mr. Bolze also added that Ghana is moving in the right direction. “I look at things over time and where Ghana was five years ago and where it is moving to now; the country will double its amount of power available, and that is amazing.”